Knorr-Bremse Group – external ratings.

We adopt a far-sighted and prudent approach.

Based on our performance in fiscal 2015, Standard & Poor’s and Moody’s currently award the Knorr-Bremse Group “A” and “A2” ratings respectively, and both rate the outlook as “stable”. This represents a one-step upgrade in each case compared to our previous ratings of “A-“ and “A3” respectively.

Last year, both rating agencies already raised the outlook for Knorr-Bremse from “stable” to “positive” in recognition of the continuity of the Group’s management performance and its stronger competitive position, not least as a result of high investments in research and development. They also commended the Knorr-Bremse Group’s substantial growth through acquisitions and the establishment of joint ventures. As this development continued throughout the past financial year, it was only logical that the Group’s creditworthiness should be further upgraded.

The current ratings put Knorr-Bremse among the top-placed automotive, commercial vehicle and rail vehicle suppliers worldwide.

We build trust.

For the past 15 years, Knorr-Bremse has had its creditworthiness externally assessed by the two prominent and internationally renowned rating agencies, Standard & Poor's and Moody's. The resultant ratings are of great importance to Knorr-Bremse. Positive ratings not only build trust in the Knorr-Bremse Group’s financial stability among customers and suppliers, a prerequisite in any long-term business relationship, they also have a positive impact on access to financing on the capital market and from banks.

From the outset, both rating agencies have assigned the Knorr-Bremse Group investment grade status, but even so, the Group continues to strive to systematically improve its financial stability and thus its creditworthiness ratings. Knorr-Bremse is one of the few family-owned firms to have an external rating and also to be awarded A ratings, placing it in the highest category.

We are strongly positioned.

The commercial and financial basis for Knorr-Bremse’s ratings is provided above all by the Group’s two separate divisions, Rail Vehicle Systems and Commerciale Vehicle Systems, which with their different portfolios represent a decisive stability factor. Another important factor for the ratings is the balanced geographic distribution of sales revenues across the Knorr-Bremse Group. The two divisions also are subject to economic cycles that often take very different courses in terms of time and region. This diversification in geographies and products strengthens the Group as a whole and helps mitigate the commercial risk.

One key factor for the long-term stability of the Group is the proportion of sales accounted for by the aftermarket sector, since this is far less exposed to crisis-led volatility than the original equipment market. In this respect, the two rating agencies honor the above average proportion of aftermarket sales posted by the Knorr-Bremse Group.

We stand for sound financial planning.

An important indicator in any rating is the reliability of a company’s financial planning and the realization of those plans over longer periods. Here, Knorr-Bremse presents a very stable track record stretching back more than 15 years in which targets have generally been reached or exceeded. Acquisitions, the establishment of joint ventures and other financial transactions that contribute to the growth of the Knorr-Bremse Group are conducted with foresight, circumspection and manageable levels of risk. The resultant prudent and conservative financial policy represents another central pillar of the Group’s A-class creditworthiness rating.

In the past ten years, the Knorr-Bremse Group has also regularly succeeded in generating above average levels of free cash flow. The resultant liquidity is constantly available to the Group short term, which puts it in a position to act quickly and renders it to a certain extent independent of financial institutions. In view of potential crisis scenarios, the rating agencies consider such independence particularly important.